Running a healthy company, your duty is to promote its success for the benefit of shareholders. When the company is in real financial difficulty and insolvency becomes a possibility, that focus shifts towards the interests of creditors. Understanding this change is important, because decisions made in this period can be looked at carefully later. This is general information, not legal advice.
Practical things that help
- Keep clear, dated records of the decisions you take and the reasons behind them.
- Hold and minute regular board discussions about the financial position.
- Avoid taking on new credit you have no realistic way of repaying.
- Treat creditors even-handedly rather than preferring connected parties.
- Take professional advice from an accountant or licensed insolvency practitioner sooner rather than later.
Why early advice matters
Directors who seek advice early usually have more legitimate options and a stronger record of having acted responsibly. Waiting until the position is critical narrows what can be done and removes the benefit of acting in good time.
If your company holds a Credicorp Flex or Credicorp Slice facility, keep us informed as part of acting responsibly toward your creditors. Our loan is to the company, and early, honest contact lets us respond constructively rather than reactively.
See also: How Credicorp treats businesses in financial difficulty, Looking after yourself while running a business in difficulty, Where can my company get free, independent business debt advice?.